And the markets come down, as inevitably as they once went up. Most of us, disciples of Motivator and (mostly) passive investing, take a deep breath and take this in our stride. “We’re in it for the long term”, we tell ourselves, finger hovering over the “Sell” button. Many of us have been here before, the dot com crash and Lehman Brothers in 2008 being our two watershed examples. But, in my days of yore, thoughts of selling out, or de-risking my portfolio into bonds and other less volatile instruments were just not a consideration. I had years – years I tell you – to watch the market recover, so I kept up the monthly payment plan while chanting the mantra “Pound Cost Averaging, Pound Cost Averaging”.
So, today finds me trying to reframe time. I turn 55 this year which, I now tell myself, will be the start of my serious investing life. It won’t be time to cash in any big slugs of my investments because that would be silly. This, of course, is the complete reverse of what I was telling myself two weeks ago when I was hoping the Trump Bump would last at least another year, just long enough for me to maximise my tax free lump sum out of my DC pension pot. Then, with the Dow Jones possibly slowing as it approached 30,000, pulling all markets in its glorious wake, I would “take profits”.
Well, it seems it was a nice idea, despite the fact that when November arrived, and if the Dow was closing in at 30,000, I know I’d be thinking, “32,000 is a better number to cash in at”. This psychology is a great way to drive yourself nuts and, I feel, is directly connected to my inability, or severe reluctance, to spend money. I’ve been regularly investing for almost twenty five years with, on a monthly basis, at least 10% of my net income being salted away into Index Trackers. Sometimes it was a lot more than that percentage. After the bills were paid, I “squirreled away” any excess cash as, for me, this was the singular most satisfying thing I could do with the money.
Recently, however, the day came when I could no longer find that incremental income, unless I started to cut my costs. I was, and am, reluctant to do this, comfortable as I am with the way I live today. Therefore, when the markets plunge downward, I’d be lying if I said I wasn’t twitching, wondering where it could end and whether or not it will recover. I’ve seen it before, I say, but are we not in new territory here, what with all that QE about to disappear and only the hangover to live with? Didn’t Japan stagnate for twenty years following their own bout of irrational exuberance? Will the Remoaners have their day in the sun, dancing in the ruins of the British economy while tweeting “Told you so!”?
Maybe. But 55 is young. I can work for another 20 years if someone will have me. And if they won’t, I can consider doing without for a time, take pleasure and satisfaction from the things in life that you’re supposed to, the things that don’t rely on money to power them. In the end, the markets will come back, I’m pretty sure of that. It may take ten days, ten months or ten years, but eventually the ship will right itself (probably!) In a way, this “correction” is a timely reminder that there’s more to life than fretting or celebrating over the Dow Jones or the FTSE or Emerging Markets, and that it’s a useful signal to focus on things outside of them for a while.